U.S. Court of Appeals for the D.C. Circuit

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D.C. Circuit issues 7-3 decision upholding constitutionality of removal limitations on the Director of the CFPB

January 31, 2018

The D.C. Circuit’s en banc decision affirms that Director Cordray violated the law in imposing a retroactive $109 million civil penalty. By a vote of 7-3, the court also held that the Dodd-Frank Act’s structure for the CFPB is constitutional. A majority of the court reasoned that the for-cause removal provision does not impede the President’s ability to fulfill his constitutional role because the President may remove the Director for “inefficiency, neglect of duty, or malfeasance in office,” and the functions of the CFPB and its Director are not core executive functions.

U.S. Chamber files amicus brief in D.C. Circuit in case to decide constitutional challenge to the structure of the CFPB

March 10, 2017

The U.S. Chamber filed an amicus brief urging the D.C. Circuit to hold that the CFPB’s structure violates the Constitution.

This case arises from a $109 million penalty imposed on PHH by Director Cordray for alleged violations of the Real Estate Settlement Procedures Act. On October 11, 2016, a panel of the D.C. Circuit vacated the $109 million penalty. The panel held that the limitation in the Dodd-Frank Act on the President’s power to remove the Director of the CFPB except for good cause is unconstitutional because it violates the separation of powers. The panel also ruled against the CFPB on the merits of the statutory and due process issues presented to the court.

On February 16, 2017, the D.C. Circuit granted rehearing en banc. The Chamber’s brief in support of PHH argues that the panel correctly held that the CFPB’s structure violates the separation of powers, that the court should resolve this important issue now, and that Congress must remedy the CFPB’s unconstitutional structure. The brief also details how the CFPB’s unconstitutional structure has led to unfair, unjustified actions that have inflicted significant harm on many businesses.

Andrew J. Pincus, Stephen C.N. Lilley, and Matthew A. Waring of Mayer Brown LLP served as counsel for the U.S. Chamber of Commerce on behalf of the U.S. Chamber Litigation Center.

D.C. Circuit grants CFPB petition for rehearing en banc in case addressing civil monetary penalties

February 16, 2017

The D.C. Circuit granted rehearing en banc. The rehearing order directs the parties to address in their briefs the following issues:

Is the CFPB’s structure, as a single-Director independent agency consistent with Article II of the Constitution and, if not, is the proper remedy to sever the for-cause provision of the statute?

May the court appropriately avoid deciding that constitutional question given the panel’s ruling on the statutory issues in this case?

If the en banc court, which has today separately ordered en banc consideration of Lucia v. SEC, 832 F.3d 277 (D.C. Cir. 2016), concludes in that case that the administrative law judge who handled that case was an inferior officer rather than an employee, what is the appropriate disposition of this case?

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